FOR IMMEDIATE RELEASE:

Date: September 26, 2001

(Washington, DC) (September 26, 2001) -- A report produced by the Specialty Steel Industry of North America (SSINA), and provided to U.S. government officials involved in global trading negotiations, characterizes the U.S. market as serving as the world's "safety valve" for foreign producers who "do not hesitate to employ unfair trade practices actively and extensively in exporting and selling their excess production in the U.S. market."

The report names the United States as the single largest country market for stainless steel, with very low tariff and non-tariff barriers, and a sophisticated and largely independent distribution system that can be exploited easily by foreign mills desperate to unload excess production at below-market prices.

SSINA Chairman H.L. Kephart stated, "Most of these foreign mills, which already produce far more than their own markets can consume, do not hesitate to employ unfair trade practices and take advantage of unfair government subsidies to export and sell their excess production in the U.S. market. These same mills enjoy tariff and non-tariff barriers that sustain their own product in protected home markets."

The report lists large subsidized capacity additions that have been announced by foreign producers in China and South Africa as well as ambitious expansions at existing facilities in Western Europe and Asia. Specifically, the report identifies:

-- New stainless steel melting capacity totaling more than 6 million metric tons and all scheduled to be on stream by the end of 2004. These huge new capacity additions have the potential to increase global production by 25-30 percent over current levels and represent nearly three times the current annual production of stainless steel in the United States. These expansions are in addition to the 1/2 million metric tons already added in 1999-2000 as well as the 2.1-2.6 million metric tons currently under consideration for 2005 and beyond.

-- Global additions to stainless cold-rolling or finishing facilities, all either recently completed or to be completed by 2004, total roughly 2 million metric tons. This compares to total U.S. consumption of 1.6 million metric tons of cold-rolled stainless in 1999. Moreover, 1.6 million to 2.0 million metric tons of additional cold-rolling capacity currently are under consideration for 2005 and beyond.

-- Stainless long products (bar and rod) will see more than 1 million metric tons of new capacity to be added by 2004. This compares to total U.S. consumption of 0.25 million metric tons of stainless bar and rod, indicating that the expansions planned or underway are more than four times the size of the entire U.S. market.

"It is apparent where this massive excess production is expected to be absorbed ? the United States," explained Kephart. "It is also apparent that much of this production will be sold unfairly. U.S. stainless steel producers decry the unfair foreign government subsidies and other state aids that are funding some of the expansions and allowing producers to produce stainless steel far in excess of domestic needs without regard to market forces."

In addition to identifying excess capacity trends, the report provides historical data for each specialty steel product. It shows that U.S. market share lost to imports increased by at least 40 percent for stainless steel, alloy tool steel and electrical steel between 1990 and 2000. Imports of stainless steel plate, for example, captured 10% of the U.S. market in 1990. By 2000, import penetration for stainless steel plate had more than doubled to 26%. Imports also claimed nearly half the market for stainless bar and more than two-thirds of the respective U.S. market for stainless rod and alloy tool steel.

Said Kephart, "Over the past decade, the United States experienced the longest period of uninterrupted economic growth ever. This should have been a time of prosperity for our industry and workers, allowing us to build a cushion for the lean years that tend to follow in cyclical industries. Instead, we lost money, market share, and workers. We appreciate the Bush Administration's commitment to a viable steel industry and global trade negotiations focused on the issue of excess foreign capacity. Particularly during these uncertain times, America needs a strong U.S. specialty steel industry for national defense purposes, the health of our economy, and the health and well-being of all Americans."

SSINA is a Washington, DC-based trade association representing virtually all continental specialty steel producers. Specialty steels are high technology, high-value stainless and other specialty alloy products. While shipments of specialty steel account for only 2% of all steel shipped in North America, annual revenues of approximately $8 billion account for over 14% of the total value of all steel shipped.

Georgetown Economic Services, a Washington, DC consulting firm specializing in international trade policy and analysis, prepared the worldwide analysis of excess steel making capacity.

David A. Hartquist, an international trade attorney with the Washington DC law firm of Collier Shannon Scott, PLLC, serves as lead counsel to SSINA.